Higher income, less waste, better quality, and improved food security are among the benefits of the farm-to-fork movement growing worldwide. But like any other supply chain in which production, processing, distribution, and consumption are interconnected, farmers and food companies must balance field productivity and biodiversity with customer demand for safe, nutrient-rich, and high-quality products.
After the COVID-19 pandemic exposed serious vulnerabilities, companies needed to take stock of their existing food systems. For example, shoppers had limited access to fresh produce, meats, and fish due to shortages and disruptions in logistics and delivery services. Meanwhile, with no way to get their products to market, farmers were forced to plow millions of pounds of vegetables and grain back into their fields, dispose of over 750,000 eggs weekly, and dump up to 3.7 million gallons of milk daily.
This gap in the farm-to-fork system may seem grim. But there is good news: a convergence of process, data, and technology provides the real-time and predictive visibility needed to optimize supply chain planning, ensuring food manufacturers can build resilience now and for the future.
Preparing for Market-Driven Demand
Most companies understand that accurate forecasts are a critical part of minimizing inventory, maximizing production efficiency, streamlining purchasing, optimizing distribution, minimizing waste, and projecting future performance confidently. However, creating a market-driven demand plan that people in different business areas and roles can use to develop individual operating strategies can be challenging.
The key to creating an effective market-driven demand plan so that food manufacturers can build resilience is access to rich forecasts based on inputs from multiple sources. By collaborating and negotiating with other business functions and suppliers based on real-time insights, your company can operate as a single, cohesive ecosystem that can quickly pivot when new opportunities and risks arise.
With advanced supply chain planning and optimization solutions, your company can achieve this edge with a fact-based sales and operations planning (S&OP) foundation and keen visibility across your global supply chain network. You can automatically generate forecasts at any defined business level – from sales and marketing to logistics and financials – by applying a best-fit methodology across the product’s life cycle. And with machine learning, analysis and reporting parameters can be immediately adjusted to boost insight accuracy while giving planners the time to work on more valuable activities.
Advanced Inventory Management
As one of the most visible supply chain expenses, inventory movement depends on customer service levels, supply chain design, and product quality. Excellence in all these areas requires predicting demand, buying supplies and producing products promptly, and responding to market demand with agility. Otherwise, inventory positions can become misaligned, leading to suboptimal revenue generation and needless waste.
An advanced inventory planning solution provides the power to automatically determine the proper inventory control parameters for each SKU or location combination, leading to improved customer service with less inventory investment.
You can also effectively measure the trade-off between specific inventory investments and desired customer service levels. Simulating and analyzing various inventory strategies across a broad spectrum of customers, products, and distribution centers allows your decision-makers to consider the impact of market factors, such as seasonality, promotions, and newly introduced products.
Supporting Time-Phased Replenishment Planning
Replenishment planning can take supply chain planning to a higher level by accurately projecting future demand, supply, and inventory levels to create a realistic picture of supplier and material requirements. However, as retail customers expect food suppliers to manage inventory at their site and guarantee a rapid replenishment cycle, advanced replenishment planning capabilities are needed to maintain high service levels and minimize costs.
By adopting technology that supports time-phased replenishment planning, you can quickly consider the effects of inventory investment, service levels, and current orders and commitments. You can evaluate inventory from multiple perspectives, including actual demand data, future distribution needs, and replenishment commitments. Advanced probabilistic safety stock calculation methods can also be leveraged to minimize inventory investments and create time-phased replenishment orders.
Planning Manufacturing Based on Demand
In some food companies, manufacturing facilities operate somewhat independently from the rest of the supply chain. But unfortunately, their focus on maximizing outputs as efficiently as possible can result in large batch sizes that exceed actual customer demand.
The optimal approach to manufacturing planning is to leverage demand, inventory, and replenishment plans to synchronize how much product should be produced to minimize cost while meeting customer service goals. You can subsequently develop capacity plans and detailed schedules that respect manufacturing constraints, optimize changeovers, and harmonize inventory of finished goods and raw materials with demand.
- Create feasible manufacturing plans
- Pinpoint capacity and material exceptions with easy-to-use visual tools
- Update released manufacturing orders to allow planning logic to extend far beyond the capabilities of shop-order sequencing
- Manage consumption, single-demand and multi-period netting against forecast inventory and time-phased safety stock policies
- Oversee shelf-life expiration of on-hand lots, planned production and receipts of raw materials, intermediates, and finished goods.
Automating Sales and Operations Planning
While manufacturing planning helps a company balance supply and demand in the near term, sales and operations planning (S&OP) processes align that equilibrium with company financial goals and objectives across longer-term tactical and strategic time horizons. Your company can transform diverse information from sales, production, finance, marketing, transportation, and procurement into one comprehensive business plan.
With a complete S&OP solution, you can cut days or weeks from your planning process by automating the planning cycle and completing multi-divisional analysis in a fraction of the time. You can compare multiple business scenarios, evaluate critical strategies, and prepare contingency plans to avoid risk and respond to market dynamics.
By identifying misalignments and problems early, S&OP processes can ascertain the right time to staff an additional shift, add new equipment, build new facilities, develop new partnerships, launch new products, and enter new markets. Data used in the S&OP process are then aggregated to help executives determine trade-offs between business alternatives.
Managing Supply Chain Data
As industry conditions become more complex, some companies realize their enterprise resource planning (ERP) systems and related applications cannot support the data needs of advanced supply chain planning and optimization. The adoption of mature business processes and technologies, such as the Internet of Things and artificial intelligence, requires data connected across multiple enterprise systems and external data sources.
Connecting multiple data sources to gain increased visibility and greater accuracy requires a supply chain data management strategy that simplifies the process and feeds supply chain planning and optimization solutions. In return, your business can lower its total cost of ownership while benefiting from the latest supply chain planning and advanced analytics innovations.
Planting the Seeds for Success
Acquiring superior supply chain planning and optimization capabilities is becoming a critical necessity for farm-to-fork supply chains. With the right supply chain planning foundation, food manufacturers can build resilience to tackle shifts in market demand, new trends, and risks as soon as possible.
By adopting technology designed to drive excellence in supply chain planning and optimization, your company can acquire the right mix of capabilities to run efficient and profitable operations and gain a competitive advantage.
It’s now or never – inject flexibility into your supply chain planning or get put out to pasture.
Vice President, Product Marketing
Lachelle Buchanan is the vice president of product marketing at Logility, where she leverages over 15 years of experience in unifying the expertise of product development teams with the market insight of sales teams for successful new product introductions. After spending half her career in marketing and the other half in supply chain, Lachelle is most passionate about bringing teams together to solve complex supply chain challenges and delivering value for customers. Owing to a passion for advanced Sales & Operations Planning, Lachelle has Oliver Wight certifications in Integrated Business Planning (Advanced S&OP), Demand Management, Integrated Supply Chain Management and Product & Portfolio Management.